Essential Business Practices for Construction Professionals

Posted on Sep 15, 2025 in Business Administration and Management (BAM)

Prioritizing Materials for Residential Building Projects

Effective material management strategies include, but are not limited to:

  • Understanding Construction Sequencing: This is a fundamental and challenging activity in the management and execution of construction projects, dictating when materials are needed.
  • Knowing Delivery Timelines: Not only understanding A.M. or P.M. delivery slots but also at which specific stage of the project materials are required.
  • Site Access and Placement: Assessing the ease of access to the site and determining optimal locations for material placement.
  • Accurate Quantity Ordering: Ensuring neither too much nor too little material is ordered to prevent waste and delays.
  • Adequate Storage: Confirming sufficient storage is available, particularly for materials requiring protection from weather and theft.

Selecting & Prioritizing Subcontractors for Building Work

When ordering subcontract trade/labour, a builder would prioritize the following considerations:

  • Experience: At the beginning of the hiring process, request a report on the subcontractor’s credentials, experience, and expertise.
  • Licensing and Currency: Ensure the subcontractor is licenced and up-to-date. You can check if a subcontractor’s license is valid by going to the Department of Fair Trading website and entering their license number.
  • Referrals: Like any job applicant process, referrals are essential. Ask them for referrals from contractors they have worked for in the past.
  • Complaint History: Check to see if there are any complaints against them. This can help prevent hiring a potentially problematic worker. This can be done via The Department of Fair Trading.

Key Considerations for Material & Product Selection

  • Warranty: Ideally, a good warranty holds the supplier/manufacturer responsible for repairing or replacing the item within a specified period should it fail outside of a specific time frame.
  • Timing: What is the lead-time in obtaining the product? How quickly can you have it for your job?
  • Price: Affordability is a key consideration, balancing cost with other factors.
  • Quality: If you decide to pass poor quality on to your customers, you risk damaging your business reputation.

Why Material Purchase Control is Crucial for Builders

Builders must control the purchase of materials for various projects for several reasons:

  • Preventing Lack of Productivity: Having material scattered around a site, not properly protected, and not clearly accounted for leads to unproductive trips by crews or delays in job completion.
  • Managing Cashflow: Running out of items (or not knowing where they are) creates over-ordering and negatively impacts cashflow.
  • Ensuring Proper Storage: Adequate storage must be available, particularly for materials that require protection from weather and theft.
  • Minimizing Waste: A lack of control surrounding materials management leads to unnecessary expenditure, which impacts the company’s bottom line.

Impact of Material Quality on Builder Purchasing Decisions

Profitable construction projects are the result of a successful blend of labour, material, and equipment management through effective project management. Discounts are usually offered as an incentive by a supplier if a large order of the same material is being purchased. A builder can negotiate to pay upfront with the assurance that the supplier ‘drip feeds’ the order based on the progress of the build, optimizing both cost and logistics.

Essential Acts, Regulations, & Codes for Onsite Construction

  • WHS Act: Provides a framework to protect the health, safety, and welfare of all workers at work. It also protects the health and safety of all other people who might be affected by the work. All workers are protected by the WHS Act.
  • Home Building Act: Relates to the residential building industry and certain specialist work.
  • Workers Compensation Act: A form of insurance that provides wage replacement and medical benefits to employees injured whilst employed.
  • NSW Environment Protection Authority (EPA): Is the primary regulator in improving environmental performance and waste management in NSW.
  • Heritage Act: Protects properties listed on the State Heritage Register and/or a local council’s Local Environmental Plan (LEP).
  • National Construction Code (NCC): A ‘performance-based code’ that is both a legal and enforceable document within the construction industry.

Ensuring Compliance in Residential Construction Projects

A builder ensures that the residential construction process is carried out in accordance with codes and standards concerning construction, insurance, sustainability, and environmental matters by:

  • Thorough project planning and organisation.
  • Effective control of project(s).
  • Identifying and assessing hazards.
  • Implementing robust risk management strategies.
  • Maintaining high safety standards.
  • Completing regular quality inspections.
  • Diligently supervising subcontractors and staff.

Common Builder-Customer Disputes & Resolution Strategies

Here are two examples of typical building business disputes between a customer and a builder, and how they may be resolved:

  • Variation or Project Delays:
    • How it arises: The client requests changes not in the original contract, or the project takes longer than initially agreed due to unforeseen circumstances or poor planning.
    • Resolution: Refer to the contract to determine if an extension of time is permissible or if variations were formally approved. Clear communication and documentation are key.
  • Quality of Work:
    • How it arises: The client perceives the quality of work or materials to be below expectations or contract specifications.
    • Resolution: Refer to drawings, specifications, and materials schedules. Does the client’s expectations meet the reality of what was agreed upon in the contract? Independent inspections may be required.

Informal Processes for Resolving Construction Disputes

An acceptable informal process to bring disputing parties together involves arranging an informal meeting where discussions can take place. It is crucial to let the other party feel heard by allowing them to speak freely. Effective two-way communication should be employed, and where possible, the manager should do most of the listening to understand the core issues.

Setting Up a Compliant Payroll System for Small Building Businesses

As a manager of a small building business, consider these five items when setting up a payroll system to ensure compliance with current legislation:

  • Legal Knowledge: Know the law, and if you don’t, seek up-to-date expert advice from someone who does.
  • Professional Assistance: Hire a bookkeeper to save time and maintain organisation and accuracy.
  • Appropriate Software: Implement suitable software and payroll systems to mitigate errors in the payroll process.
  • Timely Payments: Ensure you can pay subcontractors, staff, and suppliers (particularly the first two!) at the agreed rate and on time.
  • System Suitability: Choose a payroll system that fits your business needs, considering the size of your company and your budget.

Establishing & Administering a GST System for Builders

To set up and administer a GST system, a builder should:

  • Get advice from an accountant.
  • Register for GST.
  • Maintain diligence and organisation in financial records.
  • Ensure good recordkeeping practices are consistently followed.

Key Industrial Relations Issues Affecting Builders

Two relevant industrial relations issues of concern to builders are:

  • National Employment Standards (NES) and Awards: Fair Work Australia provides a list of industry and occupation awards that detail the minimum wages and conditions for employees. Builders must comply with these.
  • Legislative Changes: Changes in legislation via Fair Work Australia are vital to be across, as these laws determine the rights and responsibilities builders need to be aware of.

Ensuring Subcontractor Compliance with Contract Obligations

To ensure subcontractor companies comply with the principal contract company policy and obligations, it is essential to ensure conditions within the contract are clearly defined. Non-compliance should result in a breach of the contract. An example of this could be that if defective work is not corrected, then payment is withheld until the work meets the required standard.

Employer Benefits of Employee Training & Development

Training employees provides several benefits to employers:

  • Increased Job Satisfaction and Morale: This leads to increased motivation among employees and, hopefully, reduced employee turnover.
  • Enhanced Process Efficiencies: Training results in improved processes, leading to financial gain for the organisation.
  • Greater Innovation: Increased innovation in strategies leads to a greater capacity to adopt new technologies, methods, and further developed systems and processes.